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Canada’s Gildan Activewear Buys Assets of American Apparel for $66M

by San Antonio Attorney

Canadian company Gildan Activewear Inc. has acquired the rights to use the brand name of American Apparel for $66 million. The American clothing retailer has recently filed its second Chapter 11 bankruptcy.

The Montreal-based maker of branded clothing s has paid for the rights to use the brand and some products from American Apparel, but isn’t going not be acquiring any of the U.S. retailer’s stores as part of the deal.

The two companies are originally based in Montreal. American Apparel started there in 1989 and then moved to the United States later on. Gildan was launched there in 1984.

American Apparel declared bankruptcy for first time in October 2015 due to poor sales and a bitter legal battle with founder and former CEO Dov Charney, who was ousted from the fashion company over accusations of harassment to employees.

The bankruptcy case ended last February, when the new owners of the company discreetly moved ahead with intentions to sell the brand to recover their losses.

The Los Angeles-based chain, notorious for its sexually provocative marketing campaign, declared up to $500 million in assets, and almost the same amount of debts.

American Apparel is just the most recent teen clothing retailer to have become financially distressed in the past few years. Other popular clothing brands that filed for bankruptcy are Áeropostale, Pacific Sunwear and Wet Seal LLC.

According to Charney, about 5,000 employees of American Apparel have lost their jobs after he was fired. Currently, the chain operates about 227 stores around the world.

Gildan Activewear is a manufacturer of T-shirts, sport shirts, fleece, underwear, hosiery, shape wear and socks under various company-owned brands and holds the exclusive sock license for the U.S. Under Armour brand.

Gidlan recently reported sales of $715 million for third quarter, up 6% compared to the same quarter in 2015.